CityFed argues that enforcement of the Temporary Order will cause it irreparable harm in two ways. First, it contends that posting $ 9 million as a security will force CityFed into bankruptcy, as its net worth is only about $ 7.7 million. Second, if $ 9 million of its liquid assets are frozen, it will be unable to advance litigation expenses to its officers. This will result in defaults, and CityFed will be liable for the amounts of those judgments. Along similar lines, the intervenors argue that unless the Temporary Order is enjoined or stayed, they will be unable to defend themselves in the OTS proceeding and in a separate court proceeding under way in New Jersey.

Neither of these arguments is convincing. Compliance with the Temporary Order will not force CityFed into bankruptcy. First, CityFed can comply with the order by placing the $ 9 million in an escrow account. It will not have to pay over a security in excess of its net worth. Moreover, even if the terms of the Temporary Order would put CityFed in dire financial straits, the Order contains a hardship provision allowing CityFed to petition the OTS for relief from the Order. CityFed should seek relief under this provision before it argues to the Court that enforcement of the Order will cause it irreparable harm.

The Court also finds that no irreparable harm will result in relation to CityFed's obligation to compensate its directors for their legal fees. The law is settled that the claim of irreparable injury must be "both certain and great; it must be actual and not theoretical." Washington Gas Co. v. FERC, 244 U.S. App. D.C. 349, 758 F.2d 669, 674 (D.C. Cir. 1985). CityFed has pointed to no defaults that will actually issue, and no substantial judgments for which it will certainly be liable. Similarly, the intervenors have not demonstrated that, absent CityFed's advancement of legal fees, they will be unable to defend themselves. Only one Director even asserts that he does not have the resources necessary to pay his defense counsel. Furthermore, the OTS has offered to allow CityFed to advance the directors legal fees providing that the directors guarantee repayment of the advances if the OTS prevails in the underlying action. CityFed has refused this offer. It seems disingenuous to refuse the Agency's proposed resolution and then argue before this Court that the Order prevents CityFed from honoring its obligation to advance legal fees.

As the Temporary Order will not prevent CityFed's directors from defending themselves in administrative and court actions and the Order will not force CityFed into bankruptcy, the plaintiffs have failed to show that enforcement of the Temporary Order will result in irreparable harm.

B. Likelihood of Success on the Merits

CityFed claims that it will prevail in the administrative action because it will succeed on one or more of the following affirmative defense.
*fn2"

[Akin] suggests that cease and desist authority grinds to an irreversible halt once an institution is taken into receivership. . . . His interpretation of the scope of § 1818 would allow an institution and its individual officers to ignore regulations, statutes and agreements and commit flagrant violations, and yet retain immunity from cease and desist actions if the violations were sufficiently severe to warrant prompt imposition of receivership.

950 F.2d at 1185. This language, with which the Court agrees, makes clear the principle that bankruptcy does not exonerate an entity responsible for violating a regulation or agreement.

2. The OTS Did Not Meet the Statutory Requirements for Issuing a Temporary Order

CityFed also argues that the OTS did not meet the requirements for issuing a temporary cease-and-desist order under 12 U.S.C. § 1818(c)(1). The statute provides that the OTS may issue such an order if it determines that the alleged violation "is likely to cause insolvency or significant dissipation of assets or earnings of the depository institution. . . or is likely to otherwise prejudice the interests of its depositors. . . ." CityFed argues that this language does not apply to its alleged breach of the NWMA for several reasons. First, it contends that its expenditures cannot be considered a "dissipation" of assets because the word "dissipation" implies foolish or aimless wasting or squandering of resources, and CityFed's expenses are not foolish or aimless. CityFed also maintains that the alleged violation can do no harm to the assets of the depository institution because the depository institution (City Federal) no longer exists. Finally, CityFed contends that the Temporary Order could not be justified on the grounds of protecting the interests of depositors because, as a federal insurance fund has reimbursed City Federal's depositors for any losses caused by the insolvency, there are no depositors for any losses caused by the insolvency, there are no depositors left.

None of these arguments is convincing. First, if CityFed is indeed depleting assets for its own business expenses that it should have infused into City Federal, then it is "dissipating" assets. It is disingenuous to argue that funds disbursed in direct violation of an agreement with the OTS are not wasted or ill-spent. Furthermore, CityFed's expenditures can affect the assets of a depository institution, despite the fact that City Federal has entered into receivership. If the OTS is correct, the capital it seeks to freeze belongs to City Federal, not CityFed. Thus, CityFed would be spending a depository institution's assets in violation of the NWMA.

Moreover, even if CityFed's expenditures do not cause dissipation of the assets of a depository institution, the expenditures certainly prejudice the interests of City Federal's depositors. CityFed contends that this cannot be the case because City Federal no longer has any depositors--the federal insurance fund has made good on depositors' claims against the institution. CityFed ignores the fact, however, that the insurance fund now stands in the shoes of the depositors, and any action that would prejudice the depositors' interest now prejudices the insurance fund's interests. Thus, CityFed's current expenditures prejudice the interests of depositors as contemplated by § 1818(c)(1).

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